Mac Allister is Liverpool's first summer signing and has signed a five-year contract.
With a host of midfielders leaving on free transfers this summer, including Naby Keita, Alex Oxlade-Chamberlain and James Milner, there was the need for Liverpool to reinforce their midfield.
Mac Allister will not be the last signing in what is certain to be a busy summer at Anfield.
Mac Allister joined Brighton from Argentinos Juniors in January 2019 but remained at the club on loan before spending another loan stint at Boca Juniors.
He returned to the AMEX Stadium in the second half of the 2019/2020 season and became a regular under both Graham Potter and Roberto De Zerbi.
Mac Allister made 35 appearances and scored 10 goals in the Premier League this season as Brighton finished sixth and qualified for Europe for the first time in their history.
Speaking to Liverpool's official website, he said: "It feels amazing. It's a dream come true, it's amazing to be here and I can't wait to get started.
"I wanted to be in [from] the first day of pre-season, so it's good that everything is done. I'm looking forward to meeting my team-mates.
"It was a fantastic year for me - World Cup, what we achieved with Brighton - but now it's time to think about Liverpool and try to be a better player and a better human being every day."
Liverpool manager Jurgen Klopp added: “We are adding a very talented, very smart, very technically skilled boy to our squad and this is super news, really it is.”
“It is clear he is someone who can play in a number of positions in the midfield and is an all-rounder. He is calm and composed and someone with proper game intelligence.
“I’m really happy his next steps will now be with us and we get to work with a player who is already excellent and experienced, but also has so much more to come given he is just 24 years old.
“There is no pressure on him. He is still so young, so it is obvious he will only improve and our job is to help him take the next steps.”
Mac Allister made six appearances and scored one goal as Argentina won the World Cup in December.
